In Uncategorized on 11/26/2014 at 09:33

No, not Robert Browning’s verse drama, nor yet the sixth-class city in Knott County KY. This is a case where a Partial Payment Installment Agreement meets CNC meets a sole proprietorship, and gets sent back to Appeals.

Here’s Arleta S. Stover Reflections Counseling, Docket No. 15276-13L, filed 11/25/14.

It’s Arleta’s solo operation, but she owes a bushelbasketful of 941 money. Arleta filed the returns, but didn’t send in the cash.

Arleta requested CNC (Currently Not Collectible) in her go-round with Appeals, and sent in all manner of documentation. She had used one checking account for both business and personal moneys, which didn’t help, but I would point out that many small businesspeople do likewise, especially when the business income and expenses are really small.

And anyway, the SO found Arleta had little or no assets. But the SO denies CNC. So Arleta offers a PPIA.

SO says no, but here’s a straight installment agreement. Arleta says no, gets a NOD and heads for Tax Court. IRS wants summary judgment, but doesn’t get it.

Abuse of discretion is the guideline here. Arleta admits she owes.

“This Court has consistently held that an abuse of discretion cannot be established solely on the fact the Commissioner rejects a taxpayer’s PPIA proposal. However, the IRM offers guidance in granting or denying a PPIA: ‘Before a PPIA may be granted, equity in assets must be addressed and * * * in most cases taxpayers will be required to use equity in assets to pay liabilities.’ IRM (July 12, 2005).” Order, at p. 9. (Citation omitted).

But the IRM isn’t law. “The IRM merely reflects the Commissioner’s internal procedures and does not have the force of law. Therefore, it does bind this Court. Vallone v. Commissioner, 88 T.C. 794, 807-08 (1987). When the Commissioner deviates from its own internal procedures, such action does not automatically render an abuse of discretion. Id. However, when the Commissioner bases its determination of a case wholly on misapplication of internal procedures, there may exist an abuse of discretion. See e.g., Fairlamb v. Commissioner, T.C. Memo. 2010-22.” Order, at p. 9.

Whatever the numbers might yield, the SO didn’t explain them to Judge Paris’ satisfaction. The SO didn’t explain why CNC should not be granted, and why the PPIA Arleta offered wouldn’t satisfy the Collection Status Expiration Date requirement. And ultimately the numbers showed, and the SO didn’t disagree, that Arleta has minimal collection potential.

But Arleta doesn’t win. She must go back to Appeals, and the SO should make the omitted explanations.

Now for a word of complaint on my part, not to do with Arleta or Appeals.

Judge Paris, you just wrote an order with a lot of useful learning for the in-the-trenches practitioner. You obviously gave this thought. But why do you bury it in eight pages of  “pay the $60” or  “continuance granted”? I can’t read every order coming out of Tax Court; I don’t think any rational human being could without suffering severely adverse effects. Please designate your orders; all of us, they, you and I deserve it.


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